Essential Information on Tax Filing as Deadline Approaches

With the deadline rapidly approaching on March 31, it has been observed that a significant number of Nigerian taxpayers are still not aware of the necessary steps to file their personal income tax returns in accordance with the recent tax regulations.

The Nigeria Tax Act of 2025 stipulates that every individual earning an income in Nigeria is obligated to submit an annual tax return, reflecting earnings from the prior year.

The administration of Personal Income Tax (PIT) is entrusted to the State Internal Revenue Service in the taxpayer's place of residence, rather than in their state of origin.

For salaried employees, taxes are typically withheld through the Pay-As-You- Earn (PAYE) system.

However, the recent legislation now compels employees to file annual returns for documentation, assessment purposes, and to acquire a Tax Clearance Certificate (TCC).

Documents Required for Tax Filing

Before initiating the filing process, individuals must secure a Tax Identification Number (TIN), which uniquely identifies them for all tax- related matters.

The TIN can be generated via the internet using a National Identification Number (NIN) or can be obtained through the Nigeria Revenue Service or the relevant state tax office.

Additionally, individuals will need a valid form of identification along with payslips or income statements when submitting their tax returns.

Other necessary documents may include bank statements, records of income from business or freelance activities, evidence of deductions (such as pension and insurance), proof of rent payments (for those claiming rent relief), and previous tax filing receipts if applicable.

Process Overview

For employees working in corporate entities, it's required to declare all sources of income received within the year, which includes salaries, business or professional income, as well as earnings from freelance or consultancy services.

Declared income should also encompass dividends, interest earnings, and foreign income where relevant.

According to the new tax regulations, tax submissions must detail total earnings, applicable deductions or reliefs, and the tax amount due.

Tax returns can be submitted electronically through the designated state internal revenue service portal or in person at specific tax offices.

Taxpayers are obliged to file in their current state of residence and provide accurate personal, employment, and income information.

Who Needs to File Tax Returns?

Employees operating under the PAYE system are required to file a return if they have any additional income (such as from rent or freelance jobs), own a business or professional practice, or have multiple streams of income or changed employers during the year.

Upon submission of their tax returns, individuals will automatically receive an acknowledgment from the state internal revenue service.

Authorities may either accept the submitted return or issue a different assessment after review. Taxpayers hold the right to contest any assessment within the legally prescribed period.

Importance of Filing

Filing tax returns has become a legal requirement for all income earners in Nigeria. Apart from avoiding penalties, compliance is often necessary for accessing vital services like government contracts, loans, and visa applications, all of which typically require a Tax Clearance Certificate.

Non-compliance may result in various penalties, including fines and additional fees, depending on the length of the default and local regulations.

Penalties and Fines

The recent legislation clearly states that the filing deadline for individual tax returns is March 31 of each year.

Consequently, failing to meet this deadline may result in penalties of ₦100,000 for the first month and ₦50,000 for each subsequent month of non- compliance, per the new tax guidelines.

Moreover, consistent failure to pay an assessed tax liability can invoke the power of substitution, allowing tax authorities to recover dues through third parties. This provision is enforceable when a taxpayer neglects or refuses to pay their established tax liability after due notification. Under this clause, the tax authority may designate any entity or individual managing funds on behalf of the taxpayer—such as a bank, business associate, or tenant—to directly remit those funds to cover the outstanding tax debt.

However, this measure can only be invoked after confirming that the tax liability has been properly established, and the taxpayer has not complied with payment obligations.